Last year, one of PageOne.ng’s eCommerce analysts was very sceptical about the future of DealDey, Nigeria’s first and perhaps, the only daily deals site.
Events that took place in the last few weeks showed that DealDey might cease to exist should the new owner fail to revamp the startup and stick to a business model that has failed all across Africa and lost steam even in America, exemplified by the misfortunes of Groupon.
Two weeks ago, Ringier AG, one of the companies that formed a joint venture called Ringier Africa Deals Group alongside Silvertree to acquire DealDey from Kinnevik AB was confirmed to have exited the JV.
Silvertree now owns 100% of DealDey, a company that has fast become a shadow of itself in the last one year. Instead of things improving after the acquisition, DealDey has been pushed to the fringes by an equally struggling hordes of eCommerce companies.
Ringier said it will be going ahead to focus on its publishing and digital marketing consulting, a free for all sector with countless number of startups working for various companies in Nigeria who spend less than 15% of their marketing budget on digital marketing.
One would think that with Silvertree owning the company fully, there will be a sign that it will make the necessary changes, however, the comment of Paul Cook, founder and managing director of Silvertree Capital is less assuring:
“We’re super excited to have 100 per cent of such an icon of the African online space, and have lots of exciting projects underway, plus good synergies realised and coming with the rest of the Silvertree portfolio”.
What DealDey really needs?
Paul and his team at Silvertree will need to revamp the business model of the company. Here are some of my recommendations:
- Get out of daily deals business model. Daily deals has failed in Nigeria and even in South Africa with the exit of Groupon.
- See how DealDey can tie-offline proposition to its business model. It is clear that eCommerce in Nigeria will not divorce itself from offline retail in many years to come.
- Turn DealDey into a full-fledged eCommerce company and run a lean operation. There is no point ‘hiding behind one finger’ claiming to be different from eCommerce companies.
- Focus on Lagos and maybe Abuja. Do not gallivant about claiming to serve every part of Nigeria. These are the two major markets where the propensity to buy is higher, security and infrastructure is at least cosmetic compared to other many town cities with pockets of demands and zero support base for this kind of business.
- Deviate from the culture of ramping up your listings with thousands of items Nigerians do not really buy online and will not buy them online for many years to come.
Nigeria’s tech startup space would be scandalised should DealDey or any other major startup collapse. The exit of Efritin.com is already a huge stain on the market as a whole. Investors are not bringing fresh cash into their struggling eCommerce startups.
In the absence of fresh funding, leaders in these companies must also take responsibilities for their actions and inactions.